Hawaii offers a vibrant environment for business, with over 141,000 small businesses employing nearly 50% of the state’s workforce. Whether you’re an established business owner or planning to start a new venture, understanding the tax landscape in Hawaii is crucial. This guide provides a comprehensive overview of the various taxes small businesses in Hawaii must navigate, including tax rates, filing requirements, and deadlines.
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Types of Business Taxes in Hawaii
Business owners in Hawaii may be subject to various taxes depending on their business structure, activities, and revenue. Here’s a breakdown of the main types of taxes:
- Corporate Income Tax
- Pass-Through Entity (PTE) Tax
- Applicable Entities: S corporations, partnerships, and LLCs treated as partnerships at the federal level
- Tax Rate: 9%
- Filing Requirements: File Form N-362E by the 20th day of the fourth month following the close of the tax year.
- Estimated Payments: Payments are due quarterly on the 20th day of the fourth, sixth, and ninth months of the current tax year and the 20th day of the first month following the close of the tax year.
- General Excise Tax (GET)
- Withholding Tax
- Applicable Entities: Employers with employees
- Tax Rate: Varies
- Filing Requirements: File quarterly returns (Form HW-14) by the 15th day of the month following the period.
- Estimated Payments: Payments due quarterly, monthly, or semi-weekly based on withholding amounts.
- Unemployment Insurance Tax
- Nonresident Withholding Tax
- Applicable Entities: Pass-through entities with nonresident members
- Tax Rate: 11% on distributive share income
- Filing Requirements: File Form N-4 with Form N-35 (S corporations) or Form N200-V or Form N201-V with Form N-20 (partnerships) by the 20th day of the fourth month following the close of the tax year.
How to File and Pay Hawaii Business Taxes
Business taxes in Hawaii can be filed and paid through various methods:
- Online Filing and Payment: Use Hawaii Tax Online for electronic submissions and payments.
- Mail: Send forms and payments to the address on the form (where allowed).
Important Deadlines
Keep track of these key dates to avoid penalties:
- Corporate Income Tax Returns: Due by the 20th day of the fourth month after the tax year ends
- Estimated Tax Payments: Due quarterly by April 20, June 20, September 20, and January 20.
- General Excise Tax Returns: Monthly, quarterly, or semiannual filing based on liability
- Withholding Tax Returns: Due quarterly by the 15th day of the month following the period
- Unemployment Insurance Reports: Due quarterly by April 30, July 31, October 31, and January 31
- AMT Returns: Due by the 15th day of the fourth month after the tax year ends.
Tax Credits and Incentives
Hawaii offers several tax credits and incentives for small businesses, including:
- Enterprise Zone (EZ) Program: Businesses located in an EZ location, with at least half of their annual gross income from certain activities, qualify for:
- A 100% exemption from the GET for up to seven years
- An 80% income tax credit for the first year
- An additional income tax credit equal to 80% of annual unemployment insurance premiums. This goes down by 10% each year for six additional years, ending at 20%.
- Renewable Energy Technologies Income Tax Credit: Eligible individuals and corporations can claim an income tax credit for up to 35% of the total cost for a solar photovoltaic (PV), solar space heating, or solar thermal water heating systems (subject to caps) and up to 20% of the cost for wind-powered energy systems.
- Hawaii Tax Credit for Research Activities: Eligible small high-technology businesses that conduct more than 50% of their activities in qualified research can claim a refundable credit against their corporate or personal income tax for expenses incurred in research activities.
Check out our article on tax incentives for Hawaii businesses for more information.
Hawaii’s business tax breakdown by business type
Business taxes can get complicated, so below, we’ve included a chart that breaks down the taxes different business structures usually pay.
Keep in mind that pass-through entities don’t pay federal income taxes themselves—the obligation is passed on to their business owners or shareholders, who pay them through their personal income tax returns.
| Business type | Personal income tax | Pass-through election tax | Corporate income tax | General excise tax | Withholding tax | Unemployment tax | Federal income taxes |
| C corporation | No | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
| S corporation | Yes (pass-through), if not making the PTE tax election | Yes, if it makes the election | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| LLC | Yes (pass-through), if not making the PTE tax election | Depends on how it’s structured | Depends on how it’s structured | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Partnership | Yes (pass-through), if not making the PTE tax election | Yes, if it makes the election | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Sole proprietorship | Yes (pass-through) | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
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Hawaii Small Business Taxes: The Employer’s Complete 2023 Guide
Although Hawaii often brings to mind visuals of a beach vacation, the Aloha state is also a great place for aspiring entrepreneurs starting a small business.
In addition to the business opportunities available in its booming tourism industry and newer emerging markets, the number of business owners who have made the islands their home means you’ll have a huge entrepreneurial community to tap into—and many state-sponsored business incentives to take advantage of.
If you’re interested in starting a business in Hawaii, here’s what you should know about the state’s business taxes:
What business taxes do you pay in Hawaii?
Your company’s state tax obligations depend on a number of factors, including your business structure, annual revenue, and employer status. Most small business owners can expect to pay income tax, a General Excise Tax, withholding tax, unemployment tax, and any relevant local or industry-related taxes.
Hawaii’s personal income tax
Owners and members of pass-through entities—such as sole proprietorships, partnerships, and limited liability companies (LLCs)—pay their business’s income taxes through their personal tax returns.
Hawaii’s individual income tax rates range from 1.4% to 11%, depending on your earned income.
How to pay
File and pay your personal income tax returns through Hawaii Tax Online, the website Hawaii taxpayers and businesses use to manage their taxes, by April 20. The tax form you use depends on your residency status: full-time residents of the state use Form N-11, while part-year residents and nonresidents use Form N-15.
If you plan on mailing your tax return, print out your return and mail it to the appropriate address listed on your tax form instructions, along with your tax payment (if applicable).
Partnerships (and LLCs taxed as partnerships) must file a separate partnership tax return for the business itself (Form N-20). These returns must be filed by April 20 as well. Submit payment through the Hawaii Tax Online portal and mail the completed tax form to the address below:
Hawaii Department of Taxation
PO Box 3559
Honolulu, HI 96811-3559
Hawaii corporate income tax
Corporations in Hawaii must pay corporate income tax. Rates range from 4.4% to 6.4% of the business income.
How to pay
Corporate tax returns (Form N-30) are due by the 20th day of the fourth month after the fiscal year ends. For corporations following the calendar year, the due date is April 20. Note that all corporate returns must be filed on the Hawaii Tax Online platform.
The state of Hawaii also requires C corporations to make quarterly estimated tax payments by April 20, June 20, September 20, and January 20. Those who want to pay online can do so through Hawaii Tax Online, while those who prefer to pay by mail should submit payment along with Form N-201V to the address below:
Hawaii Department of Taxation
Attn: Payment Section
PO Box 1530
Honolulu, HI 96806-1530
S corporations, on the other hand, follow a slightly different set of instructions than their C corp counterparts. The due date for these returns is the same (April 20), but the tax form is different.
These returns must be mailed, although the address you send them to depends on whether you’re enclosing payment with your tax form. S corporations with a tax liability of $500 or more make estimated tax payments on the C corporation schedule outlined above.
For more information on filing Hawaii corporate income taxes, refer to the tax form instructions for C corporations and S corporations.
Hawaii General Excise Tax
All companies that conduct business in Hawaii are required to pay the state’s General Excise Tax (GET). The rate you pay is determined by your business activities:
- 0.15% for insurance commissions
- 0.5% for manufacturing and wholesaling
- 4% for all other products and services
You may choose to pass this tax onto your customers instead, as long as you include the tax in a separate line item on receipts. For more information on this, read the state’s Department of Taxation (DOT) nGET Tax Facts publication.
How to pay
You’ll need a GET license to pay this tax, so register for one through Hawaii Business Express for faster processing. Alternatively, you can submit an application by mail. To do so, complete Form BB-1 and mail it to the address below along with a $20 nonrefundable application fee:
Department of Taxation
PO Box 1425
Honolulu, HI 96806-1425
Note that, if you’re applying for multiple tax licenses with Form BB-1, you may be subject to additional fees. Once you mail in your application, expect it to be processed in three to four weeks.
After you receive your GET license, you must file GET tax returns (Form G-45) on Hawaii Tax Online on a monthly, quarterly, or semiannual basis, depending on your annual GET liability. No matter your filing frequency, your tax return is due by the 20th day of the month after the end of the tax period. All businesses in Hawaii are required to file a GET return, even if they didn’t make any profit during the tax period.
If your annual GET liability is over $4,000, the state of Hawaii requires you to file your tax return electronically. If you don’t meet the tax threshold and prefer to mail in your tax return, submit your return and payment to the Department of Taxation address above.
Each year, businesses must also file a GET return and reconciliation (Form G-49) online by the 20th day of the fourth month after the end of the tax year (April 20 for calendar filers).
For more information on filing periodic and annual GET tax forms, review these instructions from the DOT.
Withholding tax
If your business has employees, you’ll need to withhold and pay a portion of employee wages for services performed in the state and services performed by employees who regularly work within the state. These taxes are known as withholding taxes.
Use the formula in the DOT’s employer tax guide to determine your company’s withholding tax rate.
How to pay
Before you can collect and pay withholding taxes, you’ll need to register your business with the state’s Department of Taxation online or by mail (Form BB-1).
Once your company is registered, you’re required to file taxes each quarter using Form HW-14, even if you don’t have any wages to report for the period. Returns are due April 15, July 15, October 15, and January 15.
Additionally, employers need to make withholding tax payments on a regular basis. Your payment frequency depends on your annual withholding tax liability:
- Less than $5,000: Quarterly
- $5,000–$40,000: Monthly
- Greater than $40,000: Semi-weekly
These payments are due by the 15th day of the month following the end of the filing period.
If you expect your annual withholding tax liability to be greater than $40,000, you must file and pay your taxes online. However, the state of Hawaii encourages all employers to e-file their returns for quicker processing and greater accuracy.
Finally, you’ll also need to file an annual withholding tax form (Form HW-30), along with Forms W-2 and HW-2, with the DOT by January 31.
For more information on Hawaii withholding taxes, including withholding tax payment deadlines, visit the DOT website or review Hawaii’s general withholding tax instructions.
Unemployment insurance tax
Hawaii employers also pay unemployment insurance (UI) taxes. The 2023 tax rate for new businesses is 4% on the first $56,000 of each employee’s wages. Established businesses are then assigned a new rate, which ranges from 1.7% to 6.2%.
How to pay
Register your business with Hawaii’s Department of Labor and Industrial Relations (DOL) online. Then, file and pay taxes by the end of the month following each calendar quarter using Form UC-B6 (found on the HUI website linked above). You’ll need to file this form every quarter, even if you didn’t have any employees during that time period.
If you have any questions about the Hawaii unemployment insurance tax, review the state’s unemployment insurance handbook for employers.
Other industry-related and local taxes
In addition to the GET imposed by the state, many counties have adopted their own local surcharge rates for an average combined state and local sales tax rate of 4.44%.
Depending on your business industry and your offerings, your company may be subject to additional taxes and duties, such as the:
- cigarette, tobacco, and liquor tax
- fuel tax
- public service company tax
- rental vehicle, motor vehicle, and car-sharing vehicle taxes
To make sure your business stays compliant with state and local tax regulations, talk to your accountant or tax professional about what taxes you’re required to pay.
Hawaii tax breakdown by business type
Below is a chart that breaks down what federal and Hawaii state taxes different business entities can expect to pay. Keep in mind that owners and members of pass-through entities pay federal income taxes through their personal returns.
| Business type | State income taxes | General Excise Tax | Withholding tax | Unemployment tax | Federal income taxes |
| C corporation | Yes | Yes, if you don’t pass it on to customers | Yes, if you hire employees | Yes, if you hire employees | Yes |
| S corporation | Yes | Yes, if you don’t pass it on to customers | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| LLC with C corp election | Yes | Yes, if you don’t pass it on to customers | Yes, if you hire employees | Yes, if you hire employees | Yes |
| LLC | Yes | Yes, if you don’t pass it on to customers | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Partnership | Yes | Yes, if you don’t pass it on to customers | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Sole proprietorship | Yes | Yes, if you don’t pass it on to customers | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
File your Hawaii small business taxes with Gusto
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